Barker v. City of New York

• Decision Date: 10 April 1917
• Docket Number: 166.
• Parties: BARKER et al. v. CITY OF NEW YORK.
• Court: U.S. Court of Appeals — Second Circuit

242 F. 350

BARKER et al. v. CITY OF NEW YORK.

No. 166.

United States Court of Appeals, Second Circuit.

April 10, 1917

[Copyrighted Material Omitted]

Spencer Ordway & Wierum, of New York City (Nelson S. Spencer, of New York City, of counsel), for plaintiffs in error.

Lamar Hardy, Corp. Counsel, of New York City (Terence Farley Charles J. Nehrbas, and John F. Collins, all of New York City, of counsel), for defendant in error.

Before WARD, ROGERS, and HOUGH, Circuit Judges.

ROGERS Circuit Judge.

This is an action to recover damages for breach of contract. The city of New York on March 24, 1909, entered into a contract in writing with the firm of Patterson & Co., which had its principal office in the city of Pittsburgh, in the state of Pennsylvania. The contract was made by the city, through the board of water supply, by virtue of the power vested in it by chapter 724 of the Laws of 1905 of the state of New York, and the amendments thereto, for the construction of a portion of the Hudson river division of the Catskill aqueduct, including Bull Hill tunnel, in the town of Phillipstown, Putnam county, N.Y., and was known as 'Contract 22.' After the execution of the contract Patterson & Co. entered upon the performance of the work therein specified, and did a large amount of work, and furnished a large amount of materials in executing the same.

On September 20, 1910, a decree was entered in the Circuit Court of the United States for the Southern District of New York, appointing the plaintiffs temporary receivers of all the property, business, rights, assets, and effects of said firm. That decree also authorized the receivers to conduct the work under contract No. 22 until the further order of the court. They were also empowered:

'To institute suits at law or in equity for the recovery of any estate, property, damages, or demands existing in favor of the said copartnership, and in their discretion to compound and settle with any debtor of the copartnership, or with persons having possession of its property, or in any way responsible at law or in equity to the said copartnership.'

The receivers thereafter and pursuant to the decree took possession of the properties of the said copartnership, managed and operated the same, and conducted the work under contract No. 22, with the consent of the board of water supply and of the defendant. On October 13, 1910, a further decree was entered, and the temporary receivers were made permanent, with authority to conduct the work under the contract; and they completely performed the work and during the progress of it received from time to time from defendant payments on account.

The contract contained the following provision concerning the final payment on completion of the work:

'Whenever, in the opinion of the engineer (defined to be the chief engineer of the said board of water supply), the contractor shall have completely performed this contract on his part, the engineer shall so certify, in writing, to the board, and in his certificate shall state, from actual measurements, the whole amount of work done by the contractor, and also the value of such work under and according to the terms of this contract. On the expiration of 40 days after the acceptance by the board of the work herein agreed to be done by the contractor, and the filing of a certificate of the completion and acceptance of the work in the office of the comptroller, signed by the chief engineer and the board, the city shall pay to the contractor, in cash, the amount remaining after deducting from the amount or value stated in the last-mentioned certificate, all such sums as shall heretofore have been paid to the contractor under any of the provisions of this contract, and also any sum or all such sums of money as by the terms hereof the city is or may be authorized to reserve or retain.'

After complete performance of the contract the chief engineer duly certified in writing to the fact. Thereupon the board of water supply accepted the work and a certificate to that effect, signed by the engineer and the board, was filed in the office of the comptroller of the city. The certificate stated that the work was completed on September 7, 1912. It also stated that the value of the work was $724,642.97, and that the amount due was $98,518.17. The amount therein stated to be due was paid to the plaintiffs, less the sum of $4,000, which the comptroller refused to pay on the ground that the amount retained was improperly included in the final certificate.

The complaint which the plaintiffs have filed alleges three causes of action. The first is for the recovery of the $4,000 included in the final certificate and which the comptroller has refused to pay. The second and third causes of action are based upon items not included in the final certificate, but which the plaintiffs claim should have been included. At the close of the trial counsel for plaintiffs moved the court to direct a verdict in their favor for the sum of $4,000 principal and $352 interest on the first cause of action. The motion was granted. He then moved that a verdict be directed in favor of plaintiffs for the sum of $5,640 principal and $497.03 interest, making a total of $6,137.03, on the second cause of action. This was denied. He then moved that a verdict be directed in favor of plaintiffs in the sum of $39,446.30 principal and $3,476.21 interest, making a total of $42,922.51, on the third cause of action, making a final total of $53,411.54. This was denied. He then asked to go to the jury on the second cause of action, as to the amount to which the plaintiffs were entitled to recover. This was denied. He then asked to go to the jury upon the third cause of action, upon a direction that the plaintiffs were entitled to recover upon an assessment of damages to be made by the jury. This was denied.

He then asked to go to the jury upon the question as to whether or not the contract lines were in fact given by the engineers of the board of water supply to the plaintiffs, and whether those lines were erroneous, and also upon the question of damages which the plaintiffs suffered by reason of the error; and this was denied. The jury accordingly brought in a verdict for $4,352, pursuant to the court's direction.

Thereafter the court granted a motion of defendant's counsel and reduced the verdict to $2,109.98. The defendant concedes, therefore, that the sum of $4,000 arbitrarily deducted by the comptroller was erroneous, and that only $2,060.68 should have been deducted, if its defense is good. Whether is defense is good is the question which arises under the first cause of action, and which must now be considered.

As respects the first cause of action, attention has been already called to the fact that, while the final certificate showed that there was due to the contractors $98,518.17, the comptroller only paid the plaintiffs $94,518.17, retaining $4,000. It appears that the contract provided that the city should not be precluded or estopped by any certificate given by the board, or the chief engineer, or any other agent of the city, from at any time showing the correct amount and character of the work done or that the certificate was incorrect, or that the work done or materials furnished did not in fact conform to the specifications. By virtue of the above provisions the comptroller contended, and the city interposes it as a defense to the first cause of action, that the engineer extended the lines of payment in violation of the terms of the contract, and that the contractor was permitted to change the type of aqueduct to a type not shown on the contract drawings and that the final certificate was incorrect and improperly made.

This sum of $2,060.68, which the defendant now claims should be deducted, is made up of three items: (1) A deduction of $1,681.57 for open cut excavation work; (2) a deduction of $325.93 for refilling and embanking; (3) a deduction of $53.18 for concrete masonry in open cut and on embankment.

We shall consider these various items in their order. The general scheme of the contract is that the waterway should be excavated to a certain specified line shown on the contract drawings, within which no material of any kind could be permitted to remain. In order to secure this result, it was necessary that actual excavation should be carried beyond this specified line, because in earth the sides of the excavation slip into the excavated prism, and in rock the blasts cannot be made to break geometrically true. The city undertook to pay, therefore, for excavated material removed, refilling, and other work done to an arbitrary fixed line, called the payment line, outside of the specified line within which no material could remain, and it undertook so to pay, whether excavation was carried to this arbitrary line or not, or beyond it. The reason for this was that, given the width of the bottom of the invert of the aqueduct under normal conditions, the payment line was intended as a fair average of necessary excavation; if in any part of this section of the aqueduct the soil or rock proved better than the average, the contractor was to get the benefit in the cost of the work of actual excavation; if it proved worse than the average, he was to lose the cost of necessary excavation and refilling beyond the payment line.

The scheme of the contract contemplated, therefore, that the contractor might find it necessary to do certain work outside of the contract payment lines for which he would not be entitled to payment, and, again, that he would be entitled to payment, for work inside of the payment lines which had not been found necessary to perform. The theory of this was that these items would offset each other and would result in a...